Segment reporting Digital Software Inc., has two product lines. The income statement fo...

Segment reporting

Digital Software Inc., has two product lines. The income statement for the year ended December 31 shows the following:

The direct expenses of Num 1, $160,000, and of Num 2, $140,000, are not identifiable with either of the two territories.

Required:

1. Prepare income statements for the year, segmented by territory and including a column for the entire company.

2. Why are direct expenses of one type of segment report not direct expenses of another type of segment report?